Hedge - Idioms by The Free Dictionary

The Dude: It's like what Lenin said…you look for the person who will benefit, and, uh, uh...
Donny: I am the walrus.
The Dude: You know what I'm trying to say...
Donny: I am the walrus.
Walter Sobchak: Shut the fuck up, Donny! V.I. Lenin! Vladimir Illanich Uleninov!
Donny:What the fuck is he talking about, Dude?
Hello again, GME Gang. What a fun day we had yesterday! Could it continue today? Only Melvin Capital (and maybe Ryan Cohen) knows!
And an extra special hello today to our newest WSB lookie-loo, Mr. Cramer (Can I call you Jim? I’m gonna call you Jim).
Now Jim, from what I’ve been able to gather, you and your Boomer stocks and your Hot Manic Takes don’t always get a lot of love around here. But that’s not all your fault, Jim. The Paste-Eating Rocket Kids are often good for a solid meme (FYI: it’s pronounced “Mee-Mee.” Feel free to use that on air without verifying). But the Rocket Kids can be a dense bunch and they’re also often one click away from Total Financial Ruin (Quick shout out to SPCE: Pleas fly again). So you have to dig a bit in here to separate the wheat from the chaff, as someone like you actually says in real life. What the fuck even is chaff, Jim? And why do all Boomers seem to think that folksy farm-based idioms are the perfect way to conclude a thought?
Anyway. Those of us who watched your teevee clips last week where you reference your interest in WSB know that you, Jim Cramer, might be one of the Olds, but that you also Think Young(TM). https://www.thestreet.com/jim-cramestock-market-advice-moderna-boeing-fed-ftc-dec-15. So we’re going to do our best to help your young-thinkin’ brain find the Needle In the Haystack here so you can get All Your Ducks In a Row on GME. Because we know that you’re a long way from being Put Out to Pasture, and though you may be an out-of-touch millionaire prone to facile yammering, we now like you here, Jim—simply because you mentioned us and that made us blush a bit since we’re needy Millennials who just want our Boomer mommies and daddies to Tell Us They’re Proud of Us. So even though the Paste-Eating Rocket Kids here are often Buying A Pig in a Poke (Christ, please do not ever say that or the kids’ Mee-Mees are gonna fuck you up), we appreciate you recognizing that, every now and then, there’s something worth paying attention to over in this weird little pocket of the Interwebs. And since you’re actually telling your loyal single-finger-typin’ viewers to check out this WSB shitshow, and “if they’re running GME, then do some work on GME,” we assume you might actually be checking this shit out too, since all true Young Thinkers know that What’s Good for the Goose is Good for the Gander.
Now, is the GME play as solid as your recent recommendation to buy Bed Bath and Beyond? Who knows? That seems pretty stupid, and I would look it up myself this weekend but my nice little Saturday is already pretty full so I don’t know—I don’t know if I’ll have enough time. But I’ll tell you one thing: the GME play is a lot more fucking fun. Life in a pandemic is boring, but here in this weird WSB place, these kids like fun. And for all your Boomer weirdness, you seem like you still like to have a little fun in this Mad, Mad world of ours. So consider joining us here more often. A word of warning, though: if you don’t like all the dern cuss words we use around here, Jim, well that’s just, like, your opinion man, and we’ll have you know that the Supreme Court has roundly rejected Prior Restraint.
First thing’s first: we have a bit of a bone to pick with you (now there I go). The stuff you said last week about GME as the next Blockbuster was D-U-M dumb, Jim. You were a bit out of your fucking element with that. You even made our largest shareholder and conqueror-in-waiting, Mr. Ryan Cohen, send an emoji-only tweet in response, which if you know the super nice-guy Ryan Cohen like all of us do (we actually know nothing), that is pretty much the equivalent of him bringing his dog over to micturate on your and George Sherman’s rug.
Now, I myself have never been into the whole brevity thing, but I wanted to take this opportunity to get you up to speed on the GME movie you’ve wandered into. And I know you’re down with this because you told all your viewers that if WSB is talking about GME, then “make sure you know GME.” So before you say something Absolutely Mad again and Cohen sends a tweet with an even less ambiguous emoji, it’s high time that you start Making the Sure here, Jim. Just consider this to be CPT Hubbard delivering you some Orange Sunshine and turning you on to some of that Sweet, Delicious Non-Chaff Wheat you love so goddamn much.
Part 1: GME’s Bonkers-Ass Short Interest
Now, I’m going to lead with the most crowd-pleasing part of the story here (Get ready, Rocket Kids!), and it’s the one that you did not even seem remotely familiar with in your “Stay out of GameStop, Deadbeat!” rant last week. Maybe that was by design or maybe not. We’ll return to that, Jim. But the point here is: the short interest here is batshit insane. And not just your garden variety Boomer in Rolled Up Sleeves Ranting About Buying Estee Lauder While Hitting Buttons On The Beep-Bop-Boop Machine kind of insanity. Really and truly fucking nuts.
So to TL/DR this shit for you, Jim (to use the parlance of our times): GME is the most shorted stock trading today—by far. https://financhill.com/most-heavily-shorted-stocks-today How shorted? Well, the value of shares short exceeds the market cap of the company; there are currently more shares short than the total number of shares outstanding. And when factoring in the institutional and insider ownership, the total short percentage of float is nearly 300%. https://www.gurufocus.com/term/FloatPercentageOfTSO/GME/Float-Percentage-Of-Total-Shares-Outstanding/GameStop-Corp Even higher, actually, now that Cohen’s interest is over 10%. Now, I’m not a numbers whiz like you, but that level of short interest and the small available float seems pretty fucked up to me. Like: “how is that even legal?” fucked up. And just for a frame of reference, the third most shorted security right now is your beloved Bed Bath and Beyond, with a short percentage of float at a nice and tidy 69%.
Are you starting to gather why some of us in this weird little pocket of the Interwebs are a little excited about GME? You see, as u/Jeffamazon and RodAlzmann u/Uberkikz11 and others have explained in these here corners and on the twitter machine with their top-notch DD, and as I will translate to you in lingo you can dig, the short sellers got way over their skiis on this one expecting a bankruptcy in Spring of 2020 that never came. And yet, amazingly, the short interest has only increased since then—there has effectively been no covering in the aggregate and, in fact, the short percentage has only gone up. And now, on the threshold of 2021, we all sit atop a massive powder keg wondering what is going to be the thing that finally lights this shit up. And at the end of this little missive, I’m going to tell you what I think that thing might be (Spoiler: It’s Ryan Cohen! Better start getting used to seeing his name, Jim, because this dude does not fuck around and he’s not going anywhere).
https://www.reddit.com/wallstreetbets/comments/k4csaa/the_real_greatest_short_burn_of_the_century_part/
https://twitter.com/RodAlzmann
https://thecollective.finance/2020/10/gamestop-gme-a-squeeze-to-44-from-14-can-be-justified-fundamentally-100-of-the-shares-are-short-watch-out/
Part 2: GameStop Isn’t Going Bankrupt and People Actually Want to Buy Shit There
So, you foul mouthed little prick, a bonkers-ass short interest is neat and all, but why is Jim Cramer wrong when Jim Cramer compares GME to Blockbuster you might be asking yourself in the third person. First, the most obvious answer, Jim, which you should fucking know already: Blockbuster was nearly $1 Billion in debt and missing debt payments left and right when it was delisted way back in 2010. That was also when there was a bit of a credit crunch, if you recall, right after that whole Housing Crash Unpleasantness that you saw coming from a mile away and from which you made hundreds of millions of dollars due to your contrarian foresight—I’m sorry, I’m clearly confusing you with Christian Bale starring as Dr. Michael Burry, weirdo head of Scion Asset Management, which also holds about 1.4M shares of GME (You really gotta start looking into this stuff, Jim. This story is made for TV, man—and you Boomers were raised by TV and you turned out TV!). Also, in 2010 when Netflix is ripping and when Blockbuster was about to be delisted and bankrupt, an analyst noted the obvious fact that Blockbuster had “nothing on the horizon that makes it look like Blockbuster is going to be more profitable.”
https://www.reuters.com/article/us-blockbusteblockbuster-wins-debt-reprieve-forced-to-delist-idUSTRE66052720100702
But Jim, if your Blockbuster comparison has any plausibility, GameStop must have a major debt problem then, right? And yet just last month GameStop repaid $125M in debt several months ahead of time. It’s also really weird that over the past year management bought back a ton of shares, taking the OS from 102M down to just under 70M (making a short squeeze even more likely, my Rocket Children). The weirdness continues with a soon-to-be-bankrupt company holding almost $500M in cash on hand. And according to George Sherman’s “Thine Omnichannel Shalt Be The Omni-est Channel of Them All” Conference Call following Q3, by March 2021 GME will have retired a total of $500M in debt and returned $200M to shareholders through stock buy backs. I’m no expert here, and I do not presently own a Beep-Bop-Boop Machine, but that’s all pretty weird shit to be doing if you’re about to go bankrupt.
No, no – I get it: who the fuck actually looks at balance sheets anyway before spouting off about what a stock is going to do? I sure as hell don’t. That’s why I follow my man u/Uberkikz11, since that dude is a GME DD Encyclopedia and was born to crunch numbers. No, when Really Smart People make the Blockbuster comparison, it’s usually just Mouth Sounds for: A B&M Store That Used to Be Popular But Now Is Not Because Technology, QED. But here even the Really Smart People might be missing something as well. They’re right in the sense that GME must use this new console cycle window and cash influx to quickly pivot to a tech-first gaming company (more on that and our boy RC shortly!), but they’re wrong on the timing and relevance of this Super Smart Insight.
So fine, they’re doing ok on debt and cash. But who even goes to that 90s-Ass-Looking Cluttered Mall Geekery anymore anyways? I confess: in my darkest moments, as the short sellers manipulate the fuck out of this stock and I curse the names Bell and Sherman, I too have wondered this. But it turns out that, just like I have no idea why anyone listens to Maroon 5 or eats at Applebee’s, apparently a lot of people in America do shit that I do not. Crazy huh? So here is some pretty neat data showing us how out of touch we might be here, Jim:
First, when a pretty large sample size of people were recently asked the question: which of the following stores or websites do you plan to buy holiday gifts from? The #5 response from United States Americans was none other than GameStop (Ticker, Jim: GME). Only Walmart, Amazon, Target, and Dollar Store (poor people buy gifts too, Jim) were ahead of little old GameStop. That’s higher than Nike, Macy’s, the Apple Store—and double the response of Bed Bath and Fucking Beyond in every category they surveyed. Check it: (h/t to my man u/snowk88)
https://stocktwits.com/snowk88/message/260983915
That’s kinda crazy huh? See Jim, when you Think Young(TM), you really can learn something new every day. And by following our man u/snowk88 (@snowk88 over at stocktwits), I learn lots of cool shit. But guess who already knew that? The guy that wrote this bad-ass letter that identifies GME’s brand and customer data as being one of the most valuable things GME has going for it. https://s.wsj.net/public/resources/documents/RC_Ventures_Letter_to_GameStop.pdf
So now we know that Real Life People actually buy shit at GameStop here in the year of our lord 2020. But like that analyst from 2010 said about Blockbuster, there must not be anything on the horizon for GameStop to be more profitable in 2021, right?
Now, I will admit that being a bit bearish on GME in December of 2020 would make more sense if, say, GameStop were the nation’s largest purveyor of limp and half-lit pumpkin spice-scented candles and we were exiting the apogee of Shitty Candle Season. But as it turns out, GameStop is currently selling basically the most sought-after items that exist in the marketplace right now—where demand for the Xbox and Ps5 is far outpacing supply and is projected to continue well into 2021. https://www.gamesindustry.biz/articles/2020-11-17-microsoft-expects-xbox-series-x-s-shortages-until-q2-2021 I don’t really need to get into the details on that here, because it’s pretty goddamn obvious, but I think 2020 GameStop at the precipice of a new console cycle might be in a bit of a better position than, say, 2010 Blockbuster relying on the latest Adam Sandler release to lift its sagging rental numbers. But I don’t know. Millions of people don’t watch my show looking for Candid Analysis from me and my folksy man-of-the-people-lookin’ rolled-up sleeves.
Part 3: Ryan Cohen is the Sword of Damocles Hanging Over the Short Sellers’ Dumbass Heads
And now we’ve gotten to the best part. It’s my favorite part of all of this, Jim, and if you give this a little time, I think it will be yours too. You see, all that corporate bla bla bla about balance sheets and console cycles and early debt repayment and overleveraged short sellers and brand recognition is neat and all—and definitely worth a second look by itself. Maybe even a little Beep-Bop-Boop on the ol’ sound machine—I don’t know your methods. But the real thing that’s about to rip all our faces off here is the business and investment decisions of a mild-mannered wunderkind named Ryan Cohen.
Now you can revisit my prior epistle if you want to know a bit more about the involvement of Mr. Ryan Cohen in Le Affair GameStop. https://www.reddit.com/wallstreetbets/comments/kakxrm/gme_tribe_a_story_about_how_ryan_cohen_is_about/. My fly-by-night theory of his lawyer’s possible use of the consent solicitation could have probably marinated for another day, but the thrust of my argument there was that Cohen and his attorney have been laying the groundwork to come after GameStop for a while now. And that Cohen was likely emboldened by the humiliating, lame-ass CC performance by some dude with a mid-century comic-strip sounding name that we’ll all soon know only as: The Guy With the Punchable Face Who Used to Be CEO of GameStop.
But here is where things get really interesting. This is a story in the making, Jim, for fucks sake - take notes! This Monday, on December 21, Mr. Ryan Cohen filed a revised 13D showing that last week he started buying a shit-ton of shares—starting on Tuesday December 15th—which is the day after the stock price inexplicably plunged on Monday the 14th and the very same day you were yammering on the teevee about GME being Blockbuster! Instead of listening to you, however, Cohen started buying more GME shares (super-sleuth dark pool watchers u/rgrAi and u/snowk88 noticed in real-time that there was some very large accumulation taking place), which culminated in the big reveal that Cohen purchased a total of 2,501,000 additional shares last week—500,000 of which were purchased on Friday December 18, 2020 at the price of $16.02 a share. Ryan Cohen is still the single largest shareholder of GME with 9,001,000 shares in total, taking his ownership of GME above the 10% threshold from 9.98% to 12.9%. And so he apparently thinks that the floor for his investment is $16.02 per share. Is he still buying? We’ll know soon. But yesterday seemed like a little taste of what it might look like if a large buyer steps in to prevent short sellers from manipulating all of my nervous little Rocket Children here and their delicate little paper hands.
There was another thing we learned from this 13D filing: Ryan Cohen has apparently hired a new attorney and law firm. Instead of the great Christopher Davis of Kline Kaplan, now Ryan Cohen is represented by Ryan P. Nebel, a partner with Olshan Frome Wolosky, LLP. Now, if you’re familiar with my prior ramblings, you might wonder if I was a bit confused, and maybe even a little sad, at this sudden change from my man C. Davis. And you might be a little right. But then the wonder of the internet allowed me to learn a bit about these new lawyers. And holy shit, things are about to get fun.
Now, I liked what I knew about Chris Davis and he seems like a genuine bad ass activist attorney. But the folks at Olshan Frome and Wolosky, LLP are Next Level Players and really seem tailor-made for this exact situation. First off, Olshan is ranked as the top global lawfirm for Activist Attorneys. https://www.olshanlaw.com/assets/htmldocuments/Bloomberg%20Activism%20League%20Tables%20H12020.pdf (H/t @flummoxed at stocktwits). They seem to be the go-to law firm for major proxy battles initiated by activist investors. But possibly even more important is that Olshan is the same firm that represented Hestia and Permit in their successful proxy battle earlier this year to appoint two new directors to the GME Board. I’m not going into the fine details of that, because this is already a bit of a long-form Idiot’s New Yorker article, but GameStop just went through a proxy fight last year with Activist Investors Hestia Capital and Permit Capital, which resulted in two Board seats for our shareholder buds from Hestia and Permit. So, it’s reasonable to assume that the attorneys at Olshan might know their way around GameStop at this point and where the pressure points are here.
http://www.globallegalchronicle.com/hestia-capital-and-permit-capitals-two-new-directors-to-the-gamestop-board/
https://www.olshanlaw.com/resources-mentions-HestiaCapital-PermitCapital-GameStop-BoardofDirectors-ShareholderActivism.html
And if you follow u/snowk88 over at stocktwits (@snowk88)— you’d also find a wealth of DD on how Olshan rolls when entering these activist-investor-replaces-dumbass-boards-and-CEOs type disputes. To bottom line it: they get it fucking done.
https://stocktwits.com/snowk88/message/266158534
https://stocktwits.com/snowk88/message/266155112
https://stocktwits.com/snowk88/message/266153175
But what else did we learn from the 13D? We learned that Ryan Cohen is definitely not going anywhere any time soon. Specifically, the filing notes that RC Ventures intends to continue to engage in discussions with GameStop’s board “regarding means to drive stockholder value, including through changes to the composition of the board and other corporate governance enhancements." And while RC Ventures “desires to come to an amicable resolution with [GameStop, it] will not hesitate to take any actions that it believes are necessary to protect the best interests of all stockholders.”
I really like that last part, don’t you? And although I thought his November 16th letter was pretty goddamn clear, this 13D just ratcheted up the transparency level here. In sum, Ryan Cohen has all of our backs and he’s going to replace this Board and Sherman with people that are on the level and that will help implement his vision.
And now seems like a good time to return to those “Ryan Cohen: Boy Genius” articles that were definitely NOT part of a well-coordinated pre-hostile takeover media campaign initiated earlier this year. I think there might be a few things in those articles that Mr. Cohen wanted all of us shareholders (as well as the short sellers and the Board he’s about to replace) to really and truly understand. Recall also that Cohen is not one for diversification or for playing it safe. So here’s a few choice nuggets for you to ponder:
***
Bloomberg, June 2020: https://www.bloomberg.com/news/articles/2020-06-05/chewy-founder-cashes-out-bets-on-apple-wells-fargo
· "It's too hard to find, at least for me, what I consider great ideas," he says. "When I find things I have a lot of conviction in, I go all-in."
· Cohen uses the word “conviction” a lot. He says it’s something he learned from his father, who ran a glassware importing business in Montreal where Cohen grew up. “He taught me how to block the noise from the masses,” says Cohen. “To have a point of view and have conviction and not waver.”
· He wouldn’t, however, recommend his [non-diversified] investment approach to everyone. “You need to have the temperament to block the noise,” he says. “Sometimes it feels like a roller coaster.”
· He likens his obsessive focus on building Chewy to his approach to stock picking. "I don't want to swing for a single," he says.
***
You hear that, Jim? Our man Cohen likes idioms too! But fuck those farm idioms, Jim – we’re upgrading to the Sportsball kind now. So what’s the takeaway here? I’d say that Cohen has his Eye On The Ball and that it’s time for all short sellers and the Board to Throw in The Towel because Ryan Goddamn Cohen likes to Take the Bull By The Horns and will ensure that he Hits a Homerun for shareholders that believe in his vision.
Here’s a few more things Mr. Cohen wants all of us to know:
***
Forbes, August 2020: https://www.forbes.com/sites/zackfriedman/2020/08/16/entrepreneur-chewy-founder-ryan-cohen-shares-his-best-advice/?sh=41e1370e5840
· “For me, each no sounded like they just didn’t understand my vision. It was frustrating at times, but never discouraging. Those ‘no’s never made me doubt my strategy – it was the opposite. I was motivated by all the rejections and they just got me fired up.”
· “I understood that thinking big was likely going to be misunderstood along the way. I’m contrarian by nature, so being misunderstood often validates what I’m doing. It wasn’t until Chewy boxes were on doorsteps across the country that the bulk of investors started to recognize our formula.”
· “[M]y biggest risk would have been not taking risk. The risk of going head-to-head against Amazon. The risk of insourcing fulfillment. The risk of building a company in Florida rather than a popular tech hub. The risk of spending $3 million a month on TV ads, more than Home Depot HD -0.1%'s budget. The risk of hiring expensive executives even though we weren’t profitable. These decisions were some of the most controversial and required me being comfortable betting against conventional wisdom, and were often contrary to the advice of my board. Suffice it to say, I was not the most popular board member.”
· “Dad never swayed when he believed in something. I never compromised my vision, regardless how many investors turned me down I was not going to give up on building Chewy into the world’s biggest online pet retailer. I love to be challenged, and I’m flexible on details, but I’m never willing to give up.”
***
Goddamn it, Ryan. I was done having children but now you’ve forced me into getting back on that train just so I can name this future child Ryan Fucking Cohen. Thanks a lot, asshole.
But to return to my point: are those the statements of a man that seems likely to walk away at this point? Or is Cohen trying to tell us all to get ready because he is going All In on this shit?
So where does this leave us? After a huge week where Cohen buys 2.5M more shares and then the SP skyrockets to $20 yesterday on that news? Well, this is where I want to tip my cap to my man Justin Dopierala over at Seeking Alpha and allow him to conclude this section. He, along with his pal Dmitriy Kozin have been pretty clear-eyed on all this shit for a while now and they both deserve some credit. And I know I gave my main man Justin a bit of a hard time in my last novella, but the dude is sharp as hell and helped a lot of us see the forest through the trees here. And you should also definitely invite him to join your poker nights (seriously: check out the dude’s tweet in response to our own Rod Alzmann’s introduction of the #WeWantCohen hashtag right after the Q3 call debacle). https://twitter.com/DOMOCAPITAL/status/1336446055685230592. You have no comment on a potential takeover involving Ryan Cohen, Justin after your hour-long googly-eyed call together? Can’t believe you’re just preemptively leaving the WSJ and Bloomberg hanging like that. Justin, I love you dude, but if I’m holding pocket Kings I’m folding after that tweet because that twinkle in your eye lets me know you’re about to drop two Aces on my ass.
Anyway. Here is what our man Dopierala thinks might happen here soon (and he called this way back on November 17th- and sorry - no links here, per the mods, as apparently no Alpha must ever be Sought from these parts):
I think a very likely outcome at this point is a majority slate next shareholder meeting where Cohen takes over BOD and then makes himself CEO. A majority slate proxy battle would require all institutions to call in shares and would force a squeeze.
We’re intrigued, Justin. Please continue:
If Ryan Cohen successfully negotiates a purchase price with the Board then the shareholders will have to vote on it. Unlike the proxy battle where Hestia and Permit were running a minority slate of directors, an offer to purchase GameStop would force institutions like Vanguard and Blackrock to call in their shares. By doing so, the shorts would be forced to close out their positions and GameStop would finally have the greatest short squeeze of all-time. Ironically, Cohen could use this opportunity to sell all of his shares and use the proceeds to entirely fund the acquisition of GameStop going down as the first person in history to acquire a billion dollar company... for absolutely nothing. In fact, his acquisition price would be less than zero.
And now is when I get to speculate on what I think is going to happen here. But I do not necessarily think Cohen is going to put an offer to buy GME to take private. That would definitely trigger a MOASS, but I’m not sure I see it given the attorneys he’s hired and his recent buys up to $16 and the amount of cash that would take. Like Dopierala’s first comment, though, I think Cohen is going to nominate directors to replace nearly the entire Board of Directors with a vote happening at the annual meeting and once that Board is in place, they’ll appoint Cohen as CEO. And as Justin notes, if he nominates a majority slate of directors, shares will have to be called in to vote. And this vote and proxy battle will make the prior minority slate Hesita/Permit battle, and the tiny short squeeze that took place when that happened, look tame by comparison.
Now everyone: get your calendars out. Because the date to nominate directors here is in Mid-March, and my super-smart corporate lawyer buds inform me that it’s standard practice to file about 7-10 days prior. So, if this actually happening, we should be seeing something on this by early March.
But even though early March is now the mark on the wall, today’s insane price action caused me to think about all of this a bit harder and speculate a bit more. And a major h/t to my buds on the stocktwits board, especially u/rgrAi (@amarbar) for all the sharp analysis on this. But if you were Ryan Cohen and you knew this company was hugely undervalued and you had a high level of CONVICTION here and also knew you needed shareholder votes to sweep out these dumbasses and implement your vision—then how would you play this with the short interest here as crazy as it is? I’d keep buying. Why? Well, lots of reasons, you smart alecks.
First, so I have more guaranteed votes (duh?). Second, so that when the building starts burning and short hedge funds run for the exits they find that a mild-mannered Millennial with super-good ideas has sealed off all the doors and windows. That’s gruesomely delicious, isn’t it? Why else, CPT? Well, finally, and maybe most importantly, because I would want to excite and delight all my fellow shareholders by triggering a slow-burn short squeeze, raising the SP significantly, so that I can once again make the point (as he did in the Nov 16 letter) that the incompetent management that caused a HUGE drop in SP following that utterly incompetent Q3 call and the shelf registration, had nothing to do with the SP increase that again happened once Cohen announced his intent and started buying. Not the console cycle, not the cost containment measures, not the buybacks and not the early debt reduction. Nope: rightly or wrongly, shareholders will see Ryan Cohen buying shares and the corresponding SP increase and everyone—especially all new buyers who are delighted at their good fortune and swept up by Ryan Cohen Fever 2021—will start getting #WeWantCohen tattoos on their ass they’ll be so happy. And all of us, newly enriched by Ryan Cohen’s Big Canadian Balls and tactical brilliance, will crawl over glass to vote for him over The Boomer Artist Formally Known As GameStop’s CEO. I could be very wrong on this last point in particular, but if we start seeing 13Ds drop here shortly, things should get very fun very quickly.
Part 4: A Return to Our Short-Squeeze-to-Da-Moon Discussion: Who’s Side Are You Fucking On, Jim?
Now, Jim, given the fast friendship we’re creating here, and all we’ve been through over the past 5000 words, I hesitate in bringing this up. But we’ve all seen the video, Jim. You know the one I’m talking about. Yes, the one where you actually tell the truth about how short selling hedge funds manipulate the market to knock down the price of perfectly good securities that many hard-working people invest in—many normal-ass people all assuming they wont ever have to Point Where On The Dolly The Invisible Hand of the Economy Touched Them. But that’s not life now is it Jim? And fuck those poor-ass rubes for not knowing how to play the game with you sophisticated Masters of the Universe, amirite?
https://www.reddit.com/dashpay/comments/93evx4/jim_cramer_reveals_dirty_tricks_short_sellers_use/
https://dealbook.nytimes.com/2007/03/20/cramer-market-manipulato
So where are you in this whole GME/Cohen story, Jim? You candidly (gleefully?) acknowledge that a prime strategy that shorts deploy is to spread negative rumors that are then amplified by Big Smart Trustworthy Financial Media Titans like yourself to shake out unsophisticated retail players like my Rocket Kids here—who because of their tiny paper hands and you mean short selling brutes often subsist on paste and paste alone.
So for this particular security, are you the one helping with the manipulation and actively creating the “new truth” or are you just one of the Useful Idiots that these short sellers use to manipulate with an anodyne, TV media-ready comparison like: GameStop Is The Next Blockbuster? And how in the fuck does this fit into your Think Young(TM) project, Jim? Because if there is one thing that we over at WSB fucking hate, it’s a bunch of Manipulative Short Selling Boomer Fuckwads. Why on earth would a hip Young Thinker like you want to be included in that crew, Jim?
And I know we’re all friends here now, Jim, but I need to push back a bit on some of what you said in that video in such a cavalier whatareyagonnado manner. So if I understand you, short and distort and fomenting negative reactions from retail players based on deliberately false narratives is illegal, but still easy as fuck to do "because the SEC doesn't understand it." But you fucking do understand it, Jim! So why are you helping those short and distorters break the law here? Why are you being such an obtuse dumbshit? Just check out what happens to the borrow rate and short selling every time there is any good news for GME:
https://stocktwits.com/Slantedangles/message/264519950 (h/t @slantedangles). This manipulation isn't just happening with GME; it is happening everywhere. It’s baked into the cake. And that is pretty fucked up that we all just accept it because whatareyagonnado.
I think that one thing that those of us who truly do Think Young(TM) have a hard time understanding is at what point in your lives do you Boomers all finally come to realize that it’s maybe time to stop playing the game like you have been? What point do you finally have enough where doing the right thing matters more than getting paid? Maybe start by telling the truth more often—and maybe don’t go out of your way to help those corrupt-ass hedge fund managers who continually fuck over average people merely because they were stupid enough to believe you all. What contempt you Masters of the Universe have for all of them—for all of us. There is a bigger story here on GME and this out-of-control short interest (naked shorting, counterfeit shares) http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html than even Ryan Cohen and the inevitable short squeeze we’re about to witness here. And it begins and ends with people like you and Melvin Capital and Bank of America not giving a fuck about the rules while thinking you’re smarter than the rest of us who do—but who lack power to do anything about it. And you know what? Maybe you are smarter than us. You certainly know how to play this game pretty well, as that video shows. But if I know my old school 1980s movies like I think I do, this is usually the part of the story where the rag-tag kids from across the tracks come over to show you hubristic rich fuckheads what happens when you fuck a stranger in the ass.
Now I myself have never dabbled in pacifism, Jim, so this isn’t too much of a stretch for me, but seeing that video of yours and seeing the insane short interest and all the manipulation here makes me want to burn the whole corrupt system to the ground—while barricading the doors to trap in those arrogant-ass short sellers who lie and cheat and distort to profit off average people. And though I’m certain that this larger battle is not driving him, maybe that result is one that Ryan Cohen wouldn’t mind too. Though he’s a polite Canadian and would probably just let everyone know that he’s not really mad, just disappointed. But me? I’m an Angry American and I say: Block the fucking doors and windows and light that shit up.
So maybe this epistle will be useful for your Think Young(TM) project and cause you to reflect a bit more on what’s really going on out there with this whole GME thing and the likely illegal shorting that has driven the short percentage of float to these insane levels, drawing in new retail shorts too stupid to know what’s even happening. Or maybe it wont cause you to reflect in the slightest (count me as one of those cynical types that see your overtures to WSB as a transparent play for greater market share from the Young Crowd since your old-ass audience is dying and/or switching to bonds). But in a few months when all the Billy Ray Valentines and Louis Winthorpes assembled here are toasting each other in stupid shirts on a white-sand beach somewhere, we do not want you to look back on your knee-jerk boomer-ass dismissal of GME and your Useful Idiot blathering with that same tinge of regret and longing you feel when you look at a pre-Client 9 picture of you and your old roomie: warm-toes-and-hosiery-enthusiast E. Spitzer, Esq.
In conclusion: GME = Blockbuster comparisons are for Simps and Corrupt Short-and-Distorters. Don’t be like them, Jim. And to my Rocket Children: the only weapon we wield in this stupid game is Diamond Hands with a float like this. Toughen the fuck up.
And Happy Holidays everyone.
--CPT Hubbard
TL/DR: Jim Cramer likes farm-based idioms and apparently being a useful idiot to scummy short selling hedge funds. DD on the GME turnaround is solid and overleveraged short sellers should be shitting themselves. Ryan Cohen, our polite, hard-working Canadian benefactor is about to rip all our fucking faces off and trigger a MOASS. Probably even by early March, if that time is good for you (he’ll text before he comes). And fuck infinite regress: It’s rockets all the way down here. 🚀🚀🚀 Now: diamond hands, motherfuckers.
**This is a shitpost and is only to be used as investment and life advice for Mr. Jim Cramer, Esq.

Alrighty ladies and gentlemen. I think we have a fucking amazing opportunity in front of us here today. "What's that?" you might ask. I'm talking about the potential marijuana boom following a Democratic Takeover of the Senate, which is very much in the realm of possibility.
We currently stand at 50-48, Republican Seats/Democratic Seats in the Senate; Democrats already have control of the House. The last 2 seats will be determined in the GA Senate Runoff Election, and boy is it close. A few weeks ago it seemed as if Republicans had it in the bag, but as of recent, polls are showing Democrats taking a slight lead. With a lot of early votes being cast, and turnout numbers similar to the presidential race, I really think the Democrats could take control of the Senate, as Harris would cast her vote to break the tie in favor of Democrats.
So what does this mean for the marijuana industry? It means bills will be able to hit the floor and get voted on, something that Mitch McConnell has blocked since retaking control as the Majority Whip in 2015. This in turn means reform, as the Biden administration has vowed to make changes: decriminalization, banking, etc. There are huge barriers restricting the growth of MJ in the largest MJ market in the world. A Democratic Senate would unleash the dogs, open the floodgates; whatever idiom you prefer, its will be BIIIIIIIG. And in my opinion, this event is not yet priced into the market. I think the run-up to this event will start soon, so if you're interested in profiting from it, then rev up your engines because its going to be a wild, volatile ride; high risk-high reward.
In terms of positions, I really like TLRY, MSOS and IIPR.
For TLRY, the recent merger with APHA will peg the company at around a $3b valuation, about 1/3 of the valuation of CGC. Once merged, the new company will be the largest company by revenue in the world (won't last long but still significant revenue for a global company) and headquartered in the US; they already have operations there (Manitoba Harvest, a hemp-foods company, and SweetWater Brewing Co, a terpene infused craft beer maker.) They now have top branded MJ products from APHA's portfolio in the Canadian market. TLRY also has a partnership with Budweiser to make CBD infused beverages; a partnership with Sandoz (an arm of Novartis, a major pharmaceutical company) to support the commercialization of non-smokeable, non-combustible cannabis products; a partnership with Authentic Brands Group to market and distribute cannabis products (if unfamiliar with these guys just do a quick Google search to see who they work with: celebrities like Shaq, companies like Forever 21. Blackrock holds a minority stake, NBD); contract with the DEA (one of few) to study medical marijuana at UC San Diego; access and partnerships in the EU, particularly Poland (where their major grow-op is located), Israel, Germany, and Italy; multiple clinical trials set-up globally to study cannabis. To get more info on all this you can look at investor presentations from the past including their newest one, post-merger. These guys are a big deal.
There's a lot of chatter and negativity about these guys, understandably so. They burn through cash like no ones business, they're still not profitable and people don't like that their Executives sell shares hand over fist, amongst other things. Because of the negativity surrounding these issues they have relatively some of the highest short interest amongst major MJ companies so it's very volatile. I personally feel that TLRY has been beaten down to hard considering all it's done so far. They are the first movers, pioneers or trailblazers in a huge industry, and one thing I know for sure, as I worked in the industry once upon a time, that major investors want to see companies making moves, and TLRY is doing just that: MAKING MOVES.
They have a low share float as well and when these shares pop, they pop. Just take a look at the charts and see for yourself how the stock moves. Most recently the presidential election sent TLRY soaring along with the likes of many other MJ names. TLRY saw some of the biggest gains of them all. I remember seeing someone post of WSB that they put $150 down on Nov 6 weeklies on Wednesday Nov 4. When they cashed out that Friday do you know how much that measly fucking $150 was worth? Over $10k!!! Are you fucking kidding me!? I follow this industry like a crazy person and I haven't ever had a win that big. FUCK YOU, YOU FUCKING ASSHOLE! JK but not really... congrats...? kinda... whatever, fuck you.
I could say more about TLRY but I'd probably burn you all out, if I haven't already. So I'll move onto MSOS real quick which is the first ETF of its kind, listed on the NYSE with exposure to American Multi-State Operators. Nuff said.
Now for the hedge: IIPR. You might be saying to yourself, "This dude is retarded. How can IIPR, another MJ company, be a fucking hedge to the MJ play on the GA Senate Runoff results? Go read about what an actual hedge is dumbass! You don't know poop from applesauce!" But please let me explain first before you "professional" traders get your man thongs up in a bunch. IIPR is running strong and has been for good reason. It's an REIT specifically for the US Medical-MJ industry. The use capital "to acquire income producing real estate" and their "sale-leaseback and other real estate solutions offer an attractive alternative to state-licensed medical-cannabis operators who have limited access to traditional financing themselves." In other words, without access to banking partnerships with major financial institutions, which is prohibited by federal law (and banks abide by it because they'll lose access to government subsidies), MSOS's have seemingly nothing else to turn to for financing besides IIPR if they want to grow and scale their operations across the US.
So bringing it all together here's how I see this playing out. TLRY and MSOS benefit from a Democratic takeover of the Senate and we could see instant price appreciation given the future revision of federal US MJ laws, and in context of this DD, access to future banking partnerships and being able to potentially receive cheap loans like every other legal industry, through the passage of the SAFE Act. If Republicans maintain control, I believe these names will be negatively affected (the risk therein.) Right now TLRY is still in buying range even as it rises today while I write this article, most recently bouncing off support. MSOS is coming off ATH's so use TA to find a good entry; I'd recommend scaling in and cost-averaging if you're an eager beaver. (Just a note on TLRY, my #1 play: today someone bought $11 Feb Calls and $15 March Calls for a total of around $350k in premium and at the time was worth about $5m in stock at that price. I don't think anyone is betting that they're about to waste $350k in premium on options contracts... just saying. My lucky ass happened to be averaging down on those March calls by the end of last week and the beginning of this week. Booyah!)
I'm still trying to determine how IIPR will play out in this scenario but I truly think that a Democratic Takeover of the Senate would have a negative affect on its stock price near term as it becomes more obsolete, but not totally (plus its coming off ATH's so its hard to say where it finds its next level of support, which I think it could settle around the $180 mark; time will tell.) IIPR will still be a viable investment as it is very profitable, increases its dividend QoQ, and is growing fast. Plus these laws will take some time to be passed and implemented in this scenario, but remember the market is a future value pricing mechanism. It wouldn't surprise me though to even see it rise as it's still an MJ stock. In the case of Republicans maintaining control of the Senate, I see IIPR being a benefactor here given its current function, but coming off ATH's I think we need to see more consolidation for a more favorable entry point but still a good play none-the-less.
There you go everyone, take it as you wish. The information is there for you all to dominate on. I have about 30% of my portfolio on TLRY calls which is small potatoes but I'm holding these bad boys for a big payday. Still scoping a position in MSOS and IIPR. Good luck ya'll and happy investing. Let me know if there's any questions and I would love to hear your feedback!
​
PS: TLRY to da fuckin moooooooooooon!!!!!!!!!!!! 🚀🚀🚀🚀🚀
EDIT/UPDATE:
Ok this one is for the haters who think it's impossible that the DEMS takeover the Senate. Maybe I can make you a beleiber. I mean believer. Wow that was gay of me, (fuck now everyone knows, ahhhh!!!)
Anyways, just days ago I saw 1.3m in early voter turnout; 2 days ago 1.6m; today that number is up over 2m. Hmmmmmm.... let me think... last time early voting numbers came through like this, who won again....? Democrats motherfuckers! The writing is on the wall. Still not in the bag but the bull case grows for pot stocks and I don't give a fuck about stocks that you can't trade with options. I don't fucking care about CGC, which has minimal short interest on it and won't even come close to experiencing the upside TLRY has in this scenario. Buckle Up Bitches!!!

Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM
Post 2: Basics: Buying and Selling, the greeks
Post 3a: Simple Strategies
Post 3b: Advanced Strategies
Post 4a: Example of trades (short puts, covered calls, and verticals)
Post 4b: Example of trades (calendars and hedges)
---
In parts 1 and 2, I explained the basics for options. In parts 3a and 3b I explained simple and more advanced options strategies, but all of this does not help much without concrete examples. These two last posts (4a and 4b) conclude my introduction related to options. I will show some of my key trades, explaining the why, the how, the entries and exits, and potential mitigations in case of losses. Most gave great returns, and I had a few small losses. Overall, in the past few months, I have been lucky to play along with the market, and the high volatility had a positive impact. Hopefully, nothing wsb worthy (although few of them might qualify :)). I wanted to explain the basics first, then show the trades last, as I did not want anyone to try to emulate these without understanding how/why they worked.
First, here are the high-level idioms that drive my investments:

• Over time, the market is going up.
• It can fall down violently, or it can jump high without obvious signs ahead of time.
• When the market goes down, it will go back up over time, and that can be very quick.
• A single stock will be more volatile than the markets and can go up or down even more violently. And unlike the market, if it goes down, there is no guarantee it will ever go back up.
• After a significant market move, the market often, but not always, reverts to the mean.

These idioms are pretty straightforward, and should not be too controversial. Overall, I am pretty market neutral, with a bullish tint. And as I explained before, I prefer selling options than buying them. My trades reflect that, and I avoid making trades that could damage my portfolio significantly if the market went up or down significantly. People who get ruined with options do not take this into account and are just gambling.
Other key things about trading in general, and options in particular:

• Always have a clear idea of your max profit and your max loss, and the probability of that to happen. Failing to understand this means that you will take more risk than anticipated, and one day you could blow up your account and get ruined.
• Keep your trades small, don’t have a “sure thing” trade that risks 10% or more of your portfolio. Don’t cripple your portfolio because of one bad trade.
• Don’t trade for the sake of trading, wait for the conditions to be right, then wait a bit more, and wait again, then when things look the best, then trade on your own terms. Do not get sucked into gambling with a poor profit/risk profile.
• Watch out for your leverage, it can be very easy to take too many risks, and use too much of your buying power. If you mix your bearish and bullish bets, you can close one side at a profit to free some buying power and reduce overall risk.

Now the moment we have been waiting for, some of my trades:
The short naked puts or covered calls:
I only do pure covered calls when the market has dropped significantly, and use the recent market conditions as a floor. March dropped quite hard, and I am not convinced that we would reach it again soon, but I still have to prepare for it. That being said, the months of March to June have been really good for covered calls as the market traded up first, then sideways, with high implied volatility. I usually target shares that are solid or did not go up too much, so the March floor is not too far lower than my strike. I usually sell naked puts after a few down days in a row and covered calls after a few up days in a row. And if the market is farther from the floor, I trade safer names when the market goes up, and target high beta when the market dropped significantly.
I am not giving you a full list, but let’s say that it was not hard, and still is, to find good names that return 1-2% per month AFTER accounting for a 15-25% share drop. Yup, you read that right, it does not work in normal markets, but it is the case right now. Even if $WM, $WMT, $INTC, $NNN, $EWW, $DLTR, $COF, $BAC, etc. dropped by around 20%, I would gladly pocket my 1-2% premium, and scoop these at a huge discount. Even if it dropped further, I can continue rolling the puts until the market bounces back. Some of the high beta names include $CCL, $REM, $DIG, $BUD, $JETS, $XOP, etc. For a high beta, I am targeting 3-5-10% or more of premium, but I usually try to offload them when they go up significantly.
But there are few other riskier trades that are worth calling out:
$DKNG - DraftKing: 11.8% in ~3 weeks.
I forgot about the IPO, and got in the game 5 days later. Although, I am not a gambler, and the stock went up already, but I had a feeling that RH fams would jump on it (gamblers beget gamblers), and that would give a floor to the stock. Volatility was high, so selling naked PUTs made sense.
May 7: SELL -1 DKNG 100 15 MAY 20 22.5 PUT @ 1.06
Per contract - Max risk: $2144 - Max profit: $106 (4.9% of max risk)
May 8: SELL -1 DKNG 100 19 JUN 20 22.5 PUT @ 2.15
Per contract - Max risk: $2035 - Max profit: $215 (10.5% of max risk)
As you know the max risk of going to $0 is possible but highly improbable, so RORAC (Return on Risk-Adjusted Capital) is much higher than these 4.9 to 10.5%.
The $1.06 premium was one week before expiration! I sold the MAY and JUNE PUTs at the same time. And the price was at $24 already. If the price dropped, I would continue rolling my PUTs until I am profitable. The price went up, I rolled my MAY PUTs just before earnings (and a day before expiration), to take advantage of the earning volatility, and avoiding expiration day.
May 14: SELL -1 DKNG 100 15 MAY 20/19 JUNE 20 22.5 PUT @ 2.15
Per contract - Max risk: $2035 - Max profit: $215 (10.5% of max risk)
So one week later, I bought back my MAY PUTs for $0.25 (pocketing already 3.7% of the profit) and sold the same JUNE contract as the week before with a better price and an overall premium of $2.15 (same as the week before, despite paying back the $0.25! And the stock was already up in a week. Can you believe that shit? Volatility increase definitely helped. Thanks RH gamblers!).
June 1: BUY +1 DKNG 100 19 JUNE 20 22.5 PUT @ 0.05
After a bit more than 3 weeks of holding, I decided to buy back all my contracts for $0.05 per share, for an overall 11.8% profit on risk. I pretty much reached max profit already, no need to take more risk, with 19 days to go to expiration. FWIW the stock was at $44 by expiration. It was way too much for my taste, with no premium worth the risk of any new trade.
Could I have made more profit buying shares, calls, or synthetic shares? Sure. But there was no guarantee on the direction, timing, or amplitude of the move. Here, I won almost 12% with a high probability of success, even if the stock barely budged or dropped a bit. And since 6/19 expiration, the stock dropped to $33 now. It’s hard to predict when to sell. I want many singles and doubles with few losses, instead of once in a while home runs with many losses in between.
As it dropped for 5 days to $33, I recently sold some PUTs for a $22.5 strike again:
June 29: SELL -1 DKNG 100 21 AUG 20 22.5 PUT @ 1.25
Per contract - Max risk: $2125, max profit: $125 (5.8% of max risk)
Because the PUT was deep OTM, the premium was low. The stock will have to drop by more than 35% for me to start losing money, and I can still roll my PUTs then. That seems a good trade. Wish me luck!
You can see here, that you have to look at your max risk, your max profit for every trade you are getting into, as well as the chance for them to be profitable.
$USO / $DBO / $USL: 12% in 2 months
Here is one that absolutely did not go to plan initially, but I was able to turn it around.
First, the trade that led to the disaster:
April 17: SELL -1 MAY 15 20 4 PUT @ 0.35
Per contract - Max risk: $365 - Max profit: $35 (9.5% of max risk)
Remember that USO split 1:8 on April 29, if you want to look at the numbers. On 4/17, USO was worth $4.20. Oil kept dropping and dropping for weeks and weeks, until that Friday where I decided that it was finally a good time to get into oil (like a bunch of other suckers). The lowest oil price in 40 years, etc. My trade could absorb a 14% loss in USO before I started losing money, so it did not feel too risky, and I could roll the PUTs if needed. USO rolled all their future contracts earlier that week, they were already into May Futures. Yeah, contango was a concern but seemed manageable (or so I thought).
Well, except that on Monday 4/20, oil blew up. What was bad, became an awful day. Oil tanked hard because April futures dropped, and some people paid to get rid of their contracts. Tankers started to get full, too much oil, and not enough space. USO dropped to 3.75, it was still above my break-even point of $3.65, but the volatility spiked, so the value of my short put increased a lot, that was some heavy losses. Why did I go into that trade on Friday, gosh?!?
The volatility was so high, every oil trader was running around like a headless chicken, RH gamblers were taking much heavier losses than mine (because they started buying USO long before me, oil was going to go back up, that was a sure deal! Right?). I decided to wait one more day, to see how the dust would settle. On Tuesday, USO dropped even more because now it started impacting next Month's Future (May). Tuesday was the April Future expiration, so trading was all over the place. USO dropped to $3, well below my break-even point, volatility was still high, my losses were twice as big. There was a strong possibility that May Future expiration would behave the same as April, and the rollover of May Futures to June Futures would end up in a real quagmire due to an even higher contango. USO was not the right tool, I messed up, no way moving forward, even rolling my PUTs are not going to do it, USO will drop faster than the premium I can collect. Get out, get out, get out...
April 21: BUY +1 MAY 15 20 4 PUT @ 1.42
I bought back my short PUT at more than 4 times the premium price. Gulp. That hurts.
Taking a step back, this was an extreme situation and not a normal loss with a stupid long term thesis. And I lost a bit of money jumping at the wrong time. A negative future price is not a common occurrence.
USO was the wrong instrument to profit from oil, it even dropped down to $2.11. And never recovered its value from 4/17 despite oil being higher than that day. I made a mistake, but there must be better instruments that can tackle contango. Enters DBO and USL. DBO has a 6-12 month away contract, so very little impact from contango. USL has the same number of contracts from all months (next month, month after next, etc..., until the 12th month). It is mostly impacted by the contango on the front months (so for 1/12 of the value, or a bit more), but it is not as volatile as USO (USO since changed their composition too, to buy multiple months futures).
Oil blew up, volatility is extremely high, many oil traders (and RH gamblers) got ruined, but oil is bound to go up eventually. The initial trade to sell volatility through selling naked puts, and rolling as needed until oil goes back up, without being killed by the contango still seemed sound with even less risk and better rewards this time around.
April 20: SELL -1 DBO MAY 15 20 6 PUT @ 0.63
Per contract - Max risk: $537 - Max profit: $63 (11.7% of max risk)
April 20: SELL -1 USL MAY 15 20 12 PUT @ 1.05
Per contract - Max risk: $1095 - Max profit: $105 (9.5% of max risk)
April 21: SELL -1 DBO MAY 15 20 5 PUT @ 0.90
Per contract - Max risk: $410 - Max profit: $90 (21.9% of max risk)
April 21: SELL -1 USL MAY 15 20 11 PUT @ 2.25
Per contract - Max risk: $875 - Max profit: $225 (25.7% of max risk)
Notice that I sold the first batch on April 20, as I was still losing money from USO. The volatility spiked, and it was too good to pass. This is a key reason why you should never put all your money on one trade, but only a few percents at most. That way if the things are not going as planned, you don’t lose a ton, and if you can find a more advantageous position, you can double down if you have some dry powder left (but DO NOT overdo it!). It’s all about the proper sizing of trades and overall risk. I sold the 2nd batch when I closed my losing USO trade when oil dropped further and volatility increased even more! 22% to 26% potential profit on ATM puts? Just wow!
The plan for the exit is to close for $0.05 or roll to the next month for further profit. I sized my DBO and USL trades a bit more than my USO trades, so I would make up for the heavy losses. And I did roll in May and closed the June contracts for $0.05 both DBO and USL. Their prices both creeped up slowly, and the volatility dropped to something normal. DBO and USL trades were extremely profitable, and despite the heavy USO losses, the overall profit was still quite good.
Today, the price of DBO and USL is a bit high for a good profit/risk profile with naked short PUTs, however, we have some other strategies.
The verticals:
Most of my bread and butter is on selling naked puts, and/or selling covered calls, but sometimes I dabble in verticals. Here are some examples:
$UBER: 13.2% in a month
This is an example of waiting for the right time before you trade. End of May, the market went up by 36% since the bottom, it started to be over-extended. Although SPY could continue higher, it was time to think about a reversion to the mean. I needed to find a share that would continue to struggle for a long time, even as Coronavirus was lingering. I hear the news that LYFT is taking over UBER’s market and that UBER is still struggling, with potential layoffs. That seems a good candidate, and UBER has a good day at $36, let’s see what we can make of the numbers.
May 29: SELL -1 UBER JUL 17 20 42/45 CALL @ 0.40
Per contract - Max risk: $260 - Max profit: $40 (15.3% of max risk)
So I keep my $40 profit per contract as long as UBER is under $42 at the July 17 expiration. I did not pick $42 randomly, this was actually above the top that UBER reached in February. So the struggling UBER would need to go over its pre-corona numbers for me to lose money. Unlike naked puts / covered calls, where you can just be patient and roll over and over, sizing for verticals is important, the potential for full losses is a real possibility, and will happen. Sure, you could try to roll your short call and hope that the stock price will drop, but you may just end up amplifying your losses. If you really want to do that and continue with the risk, it’s easier to roll your short puts in a bull spread as the market will eventually go up.
In any case, UBER continued to go up a bit, struggled at $38 (so not even close to my vertical), then reversed. I put an order to close my position at $0.05, as there was almost a month left until expiration, and I already almost reached my max profit.
June 22: BUY +1 UBER JUL 17 20 42/45 CALL @ 0.05
$SPY: Various
I also have been using SPY verticals directly as the market bounced back like crazy. I earned more than I lost, and because I am overall positive delta, even if I lose a bit of money on my edges, I am still very profitable.
For shit and giggles, one trade to show how you can take advantage of the high volatility:
June 5: SELL -1 SPY JUL 17 20 330/333 CALL @ 0.91
Per contract - Max risk: $209 - Max profit: $91 (43.5% of max risk)
June 26: BUY +1 SPY JUL 17 20 330/333 CALL @ 0.08
Profit of $83 per contract (39.7% of max risk)
June 5, SPY was $320, 45% higher than the bottom 2½ months ago, and I had hard time believing that after the market really thought that SPY would go back to pre-corona level with still phase 1 not over, no clear treatment, vaccine many months away, and potential for a 2nd wave (News flash: It’s happening before even the phase1 finished). Trees don’t grow to the sky. Again being, overall positive delta, even if this vertical had a loss, I would still profit from SPY going over my short calls. As I said earlier, I am a reversion to the mean guy, with a bullish tint. I can’t stand losing money when the market is going up (because the market could always continue going back up).
Here is another trade, not so good this time, so I don’t paint an overly rosy picture:
May 12: SELL -1 SPY JUN 19 20 305/308 CALL @ 0.79
Per contract - Max risk: $221 - Max profit: $79 (35.7% of max risk)
June 18: BUY +1 SPY JUN 19 20 305/308 CALL @ 2.48
Ouch - loss of $169 per contract (76.4% of max risk)
SPY blew way past my short and long calls. It dropped a bit before expiration, so I was able to avoid a full loss.
My verticals above are bearish spreads when I think the market will revert to the mean. But here is an example of a bullish spread:
April 6: SELL -1 SPY DEC 16 22 200/180 CALL @ 4.85
Per contract - Max risk: $1515 - Max profit: $485 (32% of max risk)
May 12: BUY +1 SPY DEC 16 22 200/180 CALL @ 3.95
Profit of $90 per contract (5.9% of max risk)
I sold the vertical a couple of weeks after the bottom, with blood in the street, even some of mine, volatility was still very high. With this trade, I would have lost money if SPY was less than $195 in more than 2 years. Heh, I could even roll the puts if the short put was still ITM in 2 years. The only reason I bought back and closed the trade was that it was using a non-negligible buying power for the next 2 years. That is a long time to earn the full $485 per contract. Have to watch out for opportunity costs too in some other trades.
The hedge:
Here is another construct that I found interesting. Again, taking advantage of the current high volatility. Back in early June, as the market bounced to $320, I wanted another bearish hedge, but this time more efficient than just selling a vertical. I wanted a good protection for my long delta, but that’s not free. And I don’t like to lose money if the hedge is not used, so what to do?
June 5: SELL -1 SPY NOV 20 20 370/380 CALL @ 0.57
Per contract - Max risk: $943 - Max profit: $57 (6% of max risk)
I picked November expiration because I expect that we will still be in the middle of the Coronavirus quagmire. $370 is almost 9% higher than the SPY top. I doubt that the economy will be back full speed by then. Again, I am positive delta, so if SPY somehow reaches $370, I may have to forgo all my overall gains between $370 and $380, but I won’t lose money overall. And then I bought this bearish vertical:
June 5: BUY +1 SPY NOV 20 20 245/250 PUT @ 0.57
Per contract - Max risk: $57 - Max profit: $443 (777% of max risk)
Here, I used the money from my short bearish CALL spread to buy a long bearish PUT spread. As long as SPY does not end above $370 by expiration, my hedge is free. If the market drops significantly my bearish PUT spread will be very profitable.
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Once again, it's a long post, so that's all for today.
In the second part of this post, I will show how I used calendars to make some very profitable trades.
I will also explain a more advanced trade that I used to hedge against big losses in a normal market (setup in low volatility), so you can handle more gracefully bear markets ahead of time, and not sell in panic. You can’t use it now, but it could be helpful next time everything is great, and the market is getting overheated a bit.
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And finally, remember to always size your trades properly. Do not let one trade create a big loss in your portfolio. Do not overextend! It's way too easy to be over-leveraged with options, take the full risk into consideration.
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Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM
Post 2: Basics: Buying and Selling, the greeks
Post 3a: Simple Strategies
Post 3b: Advanced Strategies
Post 4a: Example of trades (short puts, covered calls, and verticals)
Post 4b: Example of trades (calendars and hedges)

Seriously.
Ace in the hole An ace in the hole is something other people are not aware of that can be used to your advantage when the time is right.
Ace up your sleeve If you have an ace up your sleeve, you have something that will give you an advantage that other people don't know about.
All bets are off If all bets are off, then agreements that have been made no longer apply.
Card up your sleeve If you have a card up your sleeve, you have a surprise plan or idea that you are keeping back until the time is right.
Go for broke If someone goes for broke, they risk everything they have for a potentially greater gain.
Hedge your bets If you hedge your bets, you don't risk everything on one opportunity, but try more than one thing.
In the cards If something is in the cards, it is bound to occur, it is going to happen, or it is inevitable.
Let the chips fall where they may This means that we shouldn't try to control events, because destiny controls them.
Luck of the draw To have the 'Luck of the draw' is to win something in a competition where the winner is chosen purely by chance.
Make bets in a burning house If people are making bets in a burning house, they are engaged in futile activity while serious problems around them are getting worse.
No dice No dice is a way of refusing to accept or agree to something.
Not miss a trick If someone doesn't miss a trick, they take advantage of everything that could help them or might be an opportunity for them.
Poker face Someone with a poker face doesn't show any emotion or reaction so that people don't know what they are feeling.
Put your cards on the table If you put your cards on the table, you make your thoughts or ideas perfectly clear.
Queen of Hearts A woman who is pre-eminent in her area is a Queen of Hearts.
Roll the dice To take a chance on something. "Let's roll the dice and see what happens."
Russian roulette If people take a dangerous and unnecessary risk, they are playing Russian roulette.
Sweeten the pot If you sweeten the pot, you increase the stakes or make something more desirable.
http://www.usingenglish.com/reference/idioms/cat/35.html